Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues:
Can a common-law spouse claim the equivalent-to-spouse credit for a child (from a previous relationship), where the spouse lived separate and apart for less than 90 days in 1995 from her common-law partner and reconciled before the end of the year.
Position TAKEN:
No
Reasons FOR POSITION TAKEN:
118(1)(a) and 118(1)(b) as they read for 1995.
August 2, 2000
Vancouver TSO HEADQUARTERS Appeals Division C. Tremblay (613) 957-2139 Attention: Connie Yeung 2000-003918
EQUIVALENT-TO-SPOUSE TAX CREDIT
This is in reply to your memorandums of July 25, 2000, requesting our views on whether an individual in a common-law relationship, who lived separate and apart from her common-law partner in the year for a period of less than 90 days, can claim the equivalent-to-spouse credit for her child pursuant to paragraph 118(1)(b) of the Income Tax Act (the "Act") for 1995.
You describe the facts of the situation as follows:
XXXXXXXXXX started living in a common-law relationship in XXXXXXXXXX. In 1995, XXXXXXXXXX were separated (and lived apart) for less than 90 days, and reconciled before the end of the year. XXXXXXXXXX had a son from a previous relationship, and she claimed the equivalent-to-spouse tax credit for 1995. The auditor disallowed the equivalent-to-spouse tax credit for 1995 because XXXXXXXXXX were separated for less than 90 days and, under paragraph 252(4)(d) of the Act, provisions available to unmarried persons do not apply to a person who has a spouse as determined by paragraph 252(4)(a) of the Act. The Appellant filed a Notice of Objection and the Minister's reassessment was confirmed based on the auditor's reasoning. The Appellant then filed a Notice of Appeal to the Tax Court of Canada.
On XXXXXXXXXX, the Appellant's representative faxed you a copy of our document number 9801987 and asked for the same treatment for the Appellant. The taxation year referred to in document number 9801987 was 1997 and the taxation year under appeal is 1995.
XXXXXXXXXX, the auditor's line of reasoning for disallowing the equivalent-to-spouse credit breaks down when you consider paragraph 252(4)(c) of the Act, which states that provisions that apply to a person who is married apply to a person who is, because of paragraph 252(4)(a) of the Act, a spouse of the taxpayer. Paragraph 118(1)(b) of the Act may apply to persons who are married as well as to persons who are unmarried. In his view, the interpretation provided by our document 9801987 correctly interprets the law.
Our Comments
We agree XXXXXXXXXX that the equivalent-to-spouse credit may, pursuant to subparagraph 118(1)(b)(i) of the Act, apply to married persons in certain situations. However, our comments on the equivalent-to-spouse credit in our document 9801987 generally apply to the 1997 and subsequent taxation years. In 1995, paragraphs 118(1)(a) and 118(1)(b) of the Act read differently than they do for 1997 and subsequent years. In 1995, the preamble in paragraph 118(1)(b) of the Act read " in the case of an individual not entitled to a deduction by reason of paragraph (a)..." while for 1997, it read " in the case of an individual who does not claim a deduction for the year because of paragraph (a)...". Accordingly, prior to 1997, an individual who at any time in a year was married and supported his or her spouse could generally not claim a deduction under 118(1)(b) of the Act, because the individual was "entitled" to a deduction under paragraph 118(1)(a) of the Act, regardless of the amount and the circumstances. As indicated in paragraph 17 of IT-513R, before 1997, for the year of reconciliation the individuals were not entitled to an equivalent-to-spouse credit.
In your situation, the individual is a married person throughout 1995 because of the extended definition of spouse in subsection 252(4) of the Act. In order for the individual to be not entitled to a deduction under paragraph 118(1)(a) of the Act, it is therefore necessary that the individual not have supported her spouse at any time during the year. In addition, the taxpayer must also be able to show that, for the period she did not live with her spouse in 1995, she neither supported nor was supported by him, in order to qualify under paragraph 118(1)(b) of the Act, assuming she meets the other requirements of that provision. The word "support" is not defined in the Act and therefore, takes its ordinary dictionary meaning. The Concise Oxford Dictionary (8th Edition) defines "support" as to "...provide with a home and the necessities of life..." In general terms, support includes the provision of the basic necessities of life such as food, shelter and clothing and, in our view, support includes both financial and non-financial support. It is a question of fact in each case to determine whether or not the actions or contributions of a particular individual are of such a nature and degree that they could be said to constitute "support" of another person. However, in our view, in the absence of a marriage breakdown (or breakdown of a conjugal relationship), the normal assumption is that the individuals in the couple who live together support one another. Accordingly, in our view, it would appear that the above-noted couple fall within the ambit of paragraph 118(1)(a) of the Act and, therefore, Sherry cannot claim the equivalent-to-spouse credit under paragraph 118(1)(b) of the Act for 1995. Consequently, while we agree XXXXXXXXXX that the auditor's reasoning for disallowing equivalent-to-spouse credit is not accurate, we are nonetheless of the view that XXXXXXXXXX is not entitled to this credit for 1995 for the above reasons.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Legislation Access Database (LAD) on CCRA's mainframe computer. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the LAD version, or they may request a copy severed using the Privacy Act criteria, which does not remove client identity. Request for this latter version should be made by you to Jackie Page at (819) 994-2898. The severed copy will be sent to you for delivery to the client.
We trust you will find our comments of some assistance.
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
- 3 -